CITATION: Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832
COURT FILE NO.: CV-11-429316
DATE: 20170202
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
EASTWOOD SQUARE KITCHENER INC.
Plaintiff
– and –
VALUE VILLAGE STORES, INC. and VALUE VILLAGE RECYCLING, INC.
Defendants
Richard J. Worsfold for the Plaintiff
Aaron Blumenfeld and Graham Splawski for the Defendants
HEARD: January 23, 2017
PERELL, J.
REASONS FOR DECISION
1. Overview and the Scope of Summary Judgment
[1] In this action, there are cross-motions for summary judgment. The action commenced in 2011. There have been examinations for discovery. A pre-trial is scheduled for March 13, 2017. The trial is scheduled for June 12, 2017. The summary judgment motions were argued on January 23, 2017.
[2] Although in Hryniak v. Mauldin, 2014 SCC 7, the Supreme Court of Canada commanded a very robust summary judgment procedure, it did not foreclose lower courts from simply dismissing the summary judgment motion and ordering that the action be tried in the normal course: Gubert v. 1536320 Ontario Limited, 2015 ONSC 3294.
[3] Where there are genuine issues for trial and the lower court concludes that employing the enhanced forensic tools of the summary judgment procedure would not lead to a fair and just determination of the merits, the court should not decide the matter summarily: Mitusev v. General Motors Corp., 2014 ONSC 2342 at para. 79; Gon (Litigation Guardian of) v. Bianco, 2014 ONSC 65 at paras. 41-47; Yusuf v. Cooley, 2014 ONSC 6501; Baywood Homes Partnership v. Haditaghi, 2014 ONCA 450 at para. 44.
[4] In Baywood Homes Partnership v. Haditaghi, supra and Trotter v. Trotter, 2014 ONCA 841, the Court of Appeal stated that when conflicting evidence is presented on factual matters, a motions judge is required to articulate the specific findings that support a conclusion that a trial is not required.
[5] In Baywood Homes Partnership v. Haditaghi, supra, and in other cases, courts have held that although a court on a summary judgment motion is empowered to make credibility findings, the court should be cautious in exercising that power to ensure that decontextualized affidavit and transcript evidence does not become the means by which substantive unfairness enters, in a way that would not likely occur in a full trial where the trial judge sees and hears it all: Abuajina v. Haval, 2015 ONSC 7938 at paras. 25-34; Gino L Arnone Professional Corp. v. Hacio, 2015 ONSC 5266; Trotter v. Trotter, supra.
[6] In 1615540 Ontario Inc. (c.o.b. Healing Hands Massage Therapy Clinic) v. Simon, 2016 ONCA 966, the Court of Appeal stated that where the evidence in the record establishes a clear conflict, it is incumbent on a summary judgment motions judge to consider expressly whether the powers provided under the summary judgment rules are to be deployed in resolving the conflict. Judges deciding summary judgment motions must provide meaningful reasons capable of appellate review explaining their decision and providing some insight into how the legal conclusion was reached and what facts were relied upon in reaching that conclusion: Read Jones Christoffersen Ltd. v. Neilas Inc., 2016 ONCA 321.
[7] Thus, to grant a summary judgment, the motions judge must do all of: (1) determine whether there is a genuine issue requiring a trial; (2) determine whether he or she can decide the genuine issues using the fact-finding resources of the summary judgment rule; (3) employ the fact-finding resources to decide the genuine issues; (4) identify and explain the specific findings that support the conclusion that a trial is not required; and, finally, (5) provide meaningful reasons capable of appellate review explaining the decision and providing some insight into how the legal conclusion was reached and what facts were relied upon in reaching that conclusion. Which is all to say that to grant a summary judgment, a judge must not only decide the matter summarily but also justify and explain to the losing party in some detail why it was appropriate to decide the factual and credibility issues summarily.
[8] In the immediate case, notwithstanding that both sides strongly argue that a summary judgment is appropriate – albeit exclusively for themselves – for the reasons expressed below, I am dismissing the motion and the cross-motion for summary judgment.
[9] I appreciate that in the immediate case, both parties desire to spare themselves the expense of a two-three week trial and that they respectively believe that they have presented an indisputably dispositive case for a summary judgment; nevertheless, I cannot justify and explain to the losing party, whomever that might be, that using the enhanced forensic tools of the summary judgment procedure would lead to a fair and just determination of the factual issues, the credibility issues, and the merits.
[10] Thus, in the immediate case, without making any binding finding of facts, I will describe the procedural and evidentiary background, the positions of the parties, and the factual background just enough to explain why it would not be appropriate to decide this case summarily.
2. Procedural and Evidentiary Background
[11] The Plaintiff, Eastwood Square Kitchener Inc., is the owner of a 12-unit, approximately 50,000 square foot shopping plaza in Kitchener, Ontario.
[12] The Defendant, Value Village Stores, Inc., the well-known 140-store national thrift retailer, is the anchor tenant.
[13] Eastwood Square sues Value Village Stores, Inc. and Value Village Recycling, Inc. (collectively “Value Village”) for breach of an alleged lease agreement, which the parties labelled a “Binding Offer to Lease.” The purpose of this alleged agreement was to expand Value Village’s already existing leased premises at the plaza from approximately 20,000 square feet to approximately 30,000 square feet.
[14] In June 2016, Value Village brought its motion for a summary judgment supported by: (a) affidavits from David Cree, Value Village’s Director of Real Estate, who was cross-examined; (b) an affidavit from Julie Peacock, a law clerk with Borden Ladner Gervais LLP, lawyers for Value Village; (c) an affidavit from Kristen Bansdale, an urban planner, who provided land use planning evidence; and (d) an affidavit from Matt Thurling, Value Village’s Construction Manager.
[15] In November 2016, Eastwood Square brought its cross-motion for summary judgment supported by: (a) an affidavit from Michael Oana, Eastwood Square’s representative, who was cross-examined; (b) affidavits from John Clinckett, the architect hired for the project, who was cross-examined; and (c) an affidavit from Shawn Collins, a planning expert, who provided an opinion about the steps necessary to obtain development approvals.
3. The Positions of the Parties
[16] In its motion for summary judgment, Eastwood Square alleges that Value Village signed the so-called Binding Offer to Lease as a binding lease, and relying principally on Bhasin v. Hrynew, 2014 SCC 71, Potter v. New Brunswick, 2015 SCC 10, and Dynamic Transport Ltd. v. OK Detailing Ltd., 1978 CanLII 215 (SCC), [1978] 2 S.C.R. 1072, Eastwood Square alleges that Value Village breached its obligations of: (a) good faith performance; and (b) honest performance not to mislead Eastwood Square with respect to the performance of the lease.
[17] Eastwood Square alleges that Value Village intentionally delayed in providing the design information needed for Eastwood Square to obtain site plan approval and a building permit from the City of Kitchener for the expansion of the existing premises. Eastwood Square submits that Value Village strung Eastwood Square along and hid that it had already decided to abandon the expansion project and rather planned a new store in a rival shopping plaza with a different landlord.
[18] In advancing its summary judgment, Eastwood Square submits that it has proven that Mr. Cree, Mr. Thurling, and Ken Alterman, Value Village’s President, acted deceptively or disingenuously and that their evidence, where it departs from the evidence of Eastwood Square’s witnesses, is not reliable or credible and is not to be believed.
[19] In its motion for summary judgment, Value Village denies that it breached any obligations of good faith and honest performance, and it alleges that notwithstanding that it signed the so-called Binding Offer to Lease, there was in fact and in law no binding lease agreement.
[20] And, Value Village submits that if there was a lease agreement, its conditions precedent were never satisfied.
[21] Thus, Value Village argues that the terms of the lease were never settled. It argues that the so-called Binding Offer to Lease was never meant to be binding but rather the document was only a device to establish a framework for negotiations; it was just an agreement to agree. Value Village argues that there were substantial terms that the parties never settled.
[22] Further, Value Village submits that the so-called Binding Offer to Lease was subject to a formal contract being negotiated but that precondition to contracting never occurred because Eastwood Square failed to even provide a template for the negotiations.
[23] Value Village denies that it was complicit in the non-satisfaction of the conditions precedent, and relying on evidence from its urban planner, Value Village argues that the conditions precedent could, in any event, never have been satisfied within the deadlines prescribed by the agreement.
[24] Moreover, Value Village submits that it was Eastwood Square that intentionally abandoned the expansion project because of unforeseen and onerous demands from the City that made the expansion project an improvident project.
[25] In advancing its summary judgment, Value Village submits that it has proven that Mr. Oana and Mr. Clinckett were not reliable and credible witnesses and where their evidence departs from the evidence of Value Village’s witnesses, it is not to be believed.
4. Factual Background
[26] A summary of the uncontested and contested facts and issues is as follows.
[27] Value Village was a tenant in Eastwood Square’s plaza under an existing lease that had been signed in 1995. The lease had a nine-year term and four five-year rights of renewal. At the plaza, Value Village operated a thrift store at which it accepted donations of used goods that it sold for a profit.
[28] In the plaza, the operation of the thrift store was somewhat of a disturbance to neighbours because donors would sometimes block fire routes and leave behind waste.
[29] In the winter and spring of 2010, Mr. Oana of Eastwood Square and Mr. Cree of Value Village, discussed entering into a new lease to expand the premises to 30,000 square feet, and to redesign the store and to build a new donation location to facilitate drop-offs, a new loading dock for large trucks to deliver and pick up goods, and a new dumpster. The plans involved construction to the premises and also a new site plan for the plaza itself. The construction required building permit approval from the City of Kitchener.
[30] By April 2010, the parties had exchanged schematic sketches about the expansion. There is a dispute between the parties about the utility of these sketches in defining the design parameters of the expanded premises and whether Eastwood Square failed to fulfill a promise to deliver construction plans in AutoCAD format and whether it was understood that the project could not move forward without these plans.
[31] On June 17, 2010, Value Village’s Real Estate Committee approved a store that would involve expanded premises and a 15-year term under a new lease.
[32] There are, however, hotly contested issues about whether the parties had come to an agreement on the essential terms of the lease and about the extent to which Value Village had committed or bound itself to the expansion project.
[33] Eastwood Square’s position is that by June of 2010, all the essential terms had been agreed to and that the parties had agreed and did enter into a Binding Offer to Lease. As noted above, Value Village’s position is that there were fundamental terms, including financial terms and terms about the design of the expansion space and the design of the site plan, that remained outstanding for negotiation and that the design matters could not be resolved unless proper construction plans were delivered, which never occurred.
[34] Value Village submits that the so-called Binding Offer to Lease, which the parties did sign on July 20, 2010, was nothing more than an agreement to agree that would, however, provide Eastwood Square’s investors some comfort in knowing that it was safe to go ahead and incur the expenses associated with hiring an architect and obtaining development approvals from the City.
[35] The so-called Binding Offer to Lease appears to have settled some terms of the arrangement between the parties including naming the parties, identifying the space, providing formulas for the rental rates, and specifying dates for delivery of the expanded premises. However, as already noted, there is a serious dispute about whether the document was intended to be binding and about whether it contained all the fundamental terms.
[36] In any event, the so-called Binding Offer to Lease had four conditions, including a condition that Eastwood Square obtain a building permit by January 15, 2011, failing which the agreement would be of no further force and effect. And it also required Eastwood Square to provide its standard form of lease to the tenant to be negotiated within two weeks; i.e., by August 3, 2010, with the final form of the lease conditional on the approval of Eastwood Square’s investors and Value Village’s Real Estate Committee.
[37] There is a serious dispute about whether the so-called Binding Offer to Lease was subject to formal contract, whether Mr. Oana ever provided a template for the formal lease negotiations, and whether the parties waived the formality of a formal contract and rather were content to be contractually governed by the so-called Binding Offer to Lease, which is Eastwood Square’s position but which is vigorously disputed by Value Village.
[38] There is a dispute between the parties about whether Eastwood Square compromised the ability to meet the development approval deadlines by its delay in retaining Mr. Clinckett, but, in any event, in September and October 2010, Mr. Clinckett had discussions with employees of the City about the redevelopment of the Value Village premises.
[39] There is a serious dispute about whether the City was a supporter or an opponent of the redevelopment of the Value Village store at the plaza.
[40] There is a very serious dispute about whether despite allegedly urgent requests from Mr. Oana and Mr. Clinckett for the information needed to complete the site plan and the process to obtain a building permit, Value Village did not provide the information to Eastwood Square and breached a duty of good faith performance of the agreement between the parties.
[41] There is a dispute about whether Value Village intended to make it impossible for Eastwood Square to satisfy the conditions precedent in the so-called Binding Offer to Lease. Value Village’s position is that it was not culpable, and that the fault in moving the project forward lies with Mr. Clinckett and with his failure to deliver proper construction plans. Eastwood Square’s position is that decisions about keeping or demolishing the existing mezzanine, the width of the production room, the location of the compact, and the location of the entrance were needed for Mr. Clinckett to prepare plans, and despite Eastwood Square’s persistent demands, Value Village never provided the required information.
[42] What seems uncontestable is that on October 14, 2010, Mr. Cree learned that there was another available location for a Value Village store at another plaza in Kitchener; on October 18, 2010, Value Village made an Offer to Lease the premises; and on October 20, 2010, Mr. Cree told Mr. Thurling not to provide answers to Mr. Clinckett. He told him: “Sit tight … I just found a potential [relocation] site … don’t mention to our landlord.” On October 21, 2010, Value Village entered into a conditional lease agreement with the rival landlord. Whether this conduct and what followed raises to the level of a breach of contract that caused any damages is a hotly contested issue.
[43] As to what follows, it is uncontestable that on November 16, 2010, Value Village’s Real Estate Committee approved the proposal for a store at the other plaza and decided not to proceed with its expansion plans for its premises at the plaza. In an e-mail, Mr. Alterman told Mr. Cree: “Just to be clear that in conjunction with the approval of the former Future Shop in south Kitchener… the proposed expansion of [the Eastwood Square store] is cancelled”. It seems indisputable that Mr. Cree never told Mr. Oana that Value Village was investigating another location and had changed its mind with respect to its expansion plans.
[44] In any event, it was a requirement that site plan applications have building elevation drawings and building configuration drawings with entrance locations, but Mr. Clinckett never prepared those drawings and rather made only a preliminary site plan application. The parties blame each other for Mr. Clinckett’s inability or failure to submit an adequate site plan application, but there is a serious dispute about whether or not, given his long-standing relationship and experience with the City of Kitchener, Mr. Clinckett could have nevertheless succeeded in a timely way in obtaining the development approvals and the building permit for the expansion project.
[45] On November 4, 2010, Mr. Clinckett met with the City employees to review the preliminary site plan application, and the City raised concerns about: (a) the required number of parking spots; (b) waste management; (c) landscaping and design issues such as the requirement for buffers, on-site vegetation and pedestrian access; (d) the requirement that lands be donated to the City; (e) an environmental assessment; and (f) storm water management issues. There is a serious controversy about whether Eastwood Square was taken aback by the City’s concerns and whether the City’s demands discouraged Eastwood Square and motivated it to get out of the expansion project.
[46] On December 6, 2010, Eastwood Square submitted a new plan that resolved the parking concerns of the City. The revised site plan assumed a front entrance to the store. There was a serious controversy about whether Eastwood Square could or would satisfy the City’s other concerns and about whether Mr. Clinckett could have provided adequate plans without obtaining more information from Value Village.
[47] During November and December 2010 and into January 2011, Mr. Oana pressed Mr. Cree for the information Mr. Clinckett was seeking, and Mr. Cree indicated that the information was coming but did not disclose that Value Village had entered into a new lease at a different plaza.
[48] On January 12, 2011, the conditions in the lease agreement for the new Kitchener store were fulfilled or waived and the lease became binding.
[49] On January 19, 22, and 24, 2011, Mr. Oana again asked Mr. Cree for the information needed to complete the construction project and there is a serious issue about whether Mr. Cree’s responses were lies.
[50] In any event, there is no dispute that on January 25, 2011, Mr. Cree advised Mr. Oana that relying on the non-satisfaction of the conditions set out in the Offer to Lease, Value Village would not be proceeding and that they would be signing a lease with another landlord within the next 24-48 hours.
5. Discussion and Analysis
[51] The discussion and analysis can be brief. As appears, there is very little in issues of fact, issues of law, and issues of mixed fact and law that is not contested. There are a plethora of genuine issues for trial including serious issues of credibility and, in my opinion, it would not be in the interests of justice to decide any of these issues summarily.
[52] I wish to point out that the fact that the trial date is imminent does not factor in my decision, although it does present an additional difficulty to explain why it would be in the interests of justice to decide this matter summarily when a trial determination is shortly available. If the summary judgment motions had been brought before the action was set down for trial, they still would have been an inappropriate route to justice.
[53] Therefore, I dismiss both summary judgment motions.
[54] Although this seems a case where costs in the cause would be the appropriate order, if the parties cannot agree about the matter of costs, then they may make submissions in writing beginning with an exchange of submissions within 20 days of the release of these Reasons for Decision followed by an exchange of reply submissions within a further 20 days.
Perell, J.
Released: February 2, 2017
CITATION: Eastwood Square Kitchener Inc. v. Value Village Stores, Inc., 2017 ONSC 832
COURT FILE NO.: CV-11-429316
DATE: 20170202
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
EASTWOOD SQUARE KITCHENER INC.
Plaintiff
– and –
VALUE VILLAGE STORES, INC. and VALUE VILLAGE RECYCLING, INC.
Defendants
REASONS FOR DECISION
PERELL J.
Released: February 2, 2017